Judge Analisa Torres wrote that Ripple is still required to follow federal securities laws regardless of the SEC’s regulatory pivot.
A US district court denied a joint motion from the US Securities and Exchange Commission (SEC) and Ripple requesting an indicative ruling to reduce a $125 million civil penalty and reverse an order defining primary sales of XRP (XRP) to institutional investors as securities transactions under Article 5 of the Securities Act.
An indicative ruling allows lower courts like the district court to issue orders for a case that is pending review in the higher appellate court system, subject to approval from the higher court.
In a Thursday filing in the United States District Court for the Southern District of New York, Judge Analisa Torres wrote that the court would not undo the earlier rulings, including the $125 million penalty, which were consistent with federal securities laws passed by Congress. Torres argued:
Ultimately, the Court granted in part the SEC’s request for an injunction and a civil penalty because the Court found that ‘Ripple’s willingness to push the boundaries of the [Summary Judgment] Order evinces a likelihood that it will eventually, if it has not already, cross the line.’ None of this has changed — and the parties hardly pretend that it has.
Nevertheless, they now claim that it is in the public interest to cut the Civil Penalty by sixty percent and vacate the permanent injunction entered less than a year ago,” Torres wrote.
The parties could reduce the penalty and circumvent the lower court’s initial rulings only through the congressionally stipulated appeals process and not by directly petitioning the lower court to reverse its orders, Torres wrote.
Cointelegraph reached out to Ripple’s legal representatives for comment but had not received a response by time of publication.
The case continues to be closely monitored by the crypto community even as it winds down and both litigants have agreed to drop the lawsuit in its entirety.
Related: Fungible cryptos in secondary sales are not securities, Ripple tells SEC
SEC lawsuit winds down as Ripple CEO celebrates dropped appeal
On March 19, Ripple CEO Brad Garlinghouse announced that the SEC had dropped its appeal against the company and celebrated the move as a “resounding victory” for the firm and the crypto industry.
As part of the wind-down, both parties filed a motion to release the $125 million held in escrow for the monetary penalties ordered by the court.
According to the filling, $50 million of the escrow balance would go to the SEC as a 60%-discounted penalty, while $75 million would be returned to Ripple, pending approval from the court.
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